Let’s start with some numbers. Equity mutual fund schemes now receive slightly over Rs5,000 crore a month via systematic investment plans (SIPs). The total assets under management (AUM) for equity schemes now stands at about Rs8 trillion.
As more individuals put money into equity funds, thought has to be given to their selection methodology. When we talk about financial products, it is their performance—or returns—that is most scrutinized.
In case of market-linked products like mutual funds, while there is an estimate that can be extrapolated, their future performance is not assured. What is certain is their past performance, or their track record. However, it is inaccurate to simply assume that these will extend into the future.